Just because people paid too much for their houses means they were either stupid or greedy...
Not sure what part of the world you're from, but in my part of the US, the rent prices were often outpacing house prices, only without the tax benefits of a mortgage. End result was that we were forced to buy a house at a grossly inflated price because of the speculative frenzy because a mortgage was actually cheaper than paying rent. We didn't buy a McMansion; we bought a modest, 60-year old fixer upper for WAY more than I would have paid under normal circumstances. The simple reality is that in the eight months we were looking, we had to raise the minimum price of the houses we looked at four times to look at anything that wasn't condemned. Meanwhile, the prices kept rising. We fortunately had been living frugally and saving for awhile, so we were able to put down a fairly sizable downpayment, and got a 30-year fixed mortgage at around 5%. My monthly payment is still a lot more than I really want to pay, but we can manage it provided my wife and I both have jobs...which remians to be seen. We saved up, kept our load ratio reasonable, and generally did everything "right." We still paid too much for our house simply because that was the economic reality we were facing, not because we were "stupid or greedy." Doesn't change the fact that we're upside down in our house to the tune of six figures. To add insult to injury, our tax dollars will be bailing out those who actually did buy way beyond their means.
Not all of us bought houses to make a quick profit. Some of us just needed a place to live. Will your "strait 5%" [sic] fix work? Not if unemployment keeps rising. Is it fair? No. Is it life? Yep. At least I can feel a little bit better about it by ranting at people who infer that I'm greedy and stupid for buying a house (however overpriced) to lower my monthly living expenses and gain a tax benefit. I can also take solace in the fact that I know the difference between "straight" and "strait."
